Tips for financing an adoption

Without a doubt, making the decision to adopt is one of the most wonderful moments in one’s life. However, with this decision comes the consciousness that adoption is an expensive choice. Although adoption costs may vary depending on the adoption type, often, the costs involved in completing an adoption are between $15,000 and $25,000.

Funding options available to prospective adoptive families are numerous and they offer to adoptive parents the flexibility to choose the best option for their case. Although costs may be discouraging, there are several ways through credits, reimbursements, and other benefits that can lower these costs efficiently and quickly.

Some of these options include, but are not limited to, the following: 

1. State Tax Credit Relief

Currently, fifteen States (Arizona, California, Idaho, Iowa, Kansas, Maryland, Massachusetts, Michigan, Missouri, New Mexico, North Dakota, Oklahoma, Utah, West Virginia, Wisconsin) offer federal tax credit, up to $12,150 for offsetting adoption expenses. The Hope for Children Act (Public Law 107-16) of 2001 asserts that tax credit relief includes adoption expenses, court fees, lawyer fees and travel expenses. 

2. Federal Tax Credit Relief

Adoptive families may claim $11,390 on federal tax income return for qualified expenses of finalized adoption within the year. Qualified expenses are considered adoption expenses, travel expenses, legal fees, court expenses and other expenses directly related to the adoption.

The tax credit is not valid for taxpayers with high modified adjusted gross incomes. Although the tax credit is set to expire in 2010, there have been numerous legislative suggestions that the benefit for adoptive families should be permanent. 

3. Corporate Adoption Assistance Programs (AAPs)

Many corporations provide Adoption Assistance Programs (AAPs) that benefit up to $5,000 per finalized adoption and do not exceed $20,000 per employee. The provisions include placement fees, adoption expenses, medical expenses, travel expenses, legal fees, court expenses and immigration and translation fees.

In addition, Adoption Assistance Programs provide reimbursement of qualified expenses assisting prospective adoptive parents to take advantage of federal income tax provisions. 

4. Military Personnel Subsidy Program

Full-time military personnel are entitled to one-time subsidy program that provides up to $2,000 per child per year with a limit of $5,000 per member. The subsidy covers all expenses of finalized adoptions including adoption fees for domestic and international adoption, placement fees, counseling fees, legal fees, and medical expenses for the birthmother and the newborn. 

5. Refinancing home equity loan

Prospective adoptive parents can refinance their mortgage and get a low interest rate from the bank, which often is tax deductible. As the adoption expenses accumulate, they are written in a checkbook and are added to the current loan balance. 

6. Borrowing from 401-k plan

Adoptive families may be eligible to borrow from their 401-k plan at a very low interest rate and fund all adoption expenses. 

7. Using credit cards available

Prospective adoptive parents who have good credit history may ask from their credit card company lower interest rates for adoption funding purposes.

8. Agencies / Organizations

There are numerous organizations that may assist by providing financial aid to adoptive families. Applying for adoption grants, receiving clothing vouchers, foster care payments and medical services are some alternative options. 

There are great examples of people who sold their property for the sake of adopting a child. Regardless of the type of financial assistance that adoptive families may choose, one thing is certain: adoptive parents who really want to adopt, always find a way to finance their adoption. They don’t let any stone unturned, they speak up everywhere for their intention and they knock on all doors until they gather the amount required to offer a neglected child or an innocent infant a real home.